While the development of the Leviathan gas reservoir off the coast of Israel is shrouded in doubt because of the fall in the price of oil, the partners in Leviathan announced today that they had signed a first contract for the sale of gas from the reservoir. The contract is with Edeltech, owned by the Edelsburg family, for the supply of 6 BCM (billion cubic meters) of natural gas over 18 years. The contract is worth $1.3 billion.
The gas will be supplied to Edeltech's two new power stations: Tamar (140 MW) in the Haifa Chemicals plant in the Rotem Plain, and the Solad (77MW) power station at the CHS plant in Ashdod.
Edeltech is Israel's largest private power producer, and the Tamar and Solad power stations, being constructed by companies owned by Edeltech and Turkish company Zorlu, will join the three gas-fuelled power stations built by the companies: the Dorad (860 MW) power station in Ashkelon; the Ramat Negev Energy station (120 MW) at the Adama Holding Ltd. (TASE:ADMA.B1) Makhteshim plant in the Neot Hovav Industrial Zone; and the Ashdod Energy station (60 MW), at the Adama Agan plant in the Ashdod industrial zone.
The power stations will together produce over 1,250 MW of electricity from natural gas, representing 10% of the power demand in the Israeli economy.
This is the first sale contract in Israel for the partners in Leviathan (Delek Drilling 22.67%, Avner Oil & Gas 22.67%, Noble Energy 39.66%, and Ratio 15%), and it follows memoranda of understanding signed by the partners last year for the supply of gas to customers in Egypt and Jordan.
Delek Drilling CEO Yossi Abu said, "We continue to work with all our might to make progress on developing the Leviathan reservoir and to bring the gas to the Israeli economy and its industry. This deal is a harbinger of things to come, and we intend to further promote sales contracts with customers in Israel, Jordan, Egypt, and Turkey. The deal demonstrates the commitment of the partnership to developing the Leviathan reservoir. Development of Leviathan will ensure the State of Israel's energy security, and the contracts for exporting gas from the Leviathan reservoir will strengthen Israel's standing in the region."
Noble Energy business development manager Niv Sarne said, "This is not only Leviathan's first domestic contract but also the first step in implementing the gas framework agreement and is another expression of Noble Energy and the Leviathan partners commitment to developing Leviathan."
He added that this is good news for the Israeli economy because the way has now been opened for domestic customers who are crying out for gas to also benefit from an environmentally friendly and cheap source of energy. "We are certain that this will be the first contract of many that will help the swift development of the Leviathan field while ensuring the supply of natural gas to the economy and increasing the reserves and strengthening Israel's energy security."
Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2016
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